INDONESIA: Garment sector hit by Jakarta wage hike

The Indonesian Textile Association (API) has branded a government decision to increase the minimum wage in the capital Jakarta and its surrounding region by 44% as "illogical", arguing the country's garment and textile industry will be hit hard by the hike.

Last week, Jakarta governor Joko Widodo raised the Jakarta minimum monthly wage to IDR2.2m (US$229) from the current IDR1.5m (US$156). The 44% wage hike will come into effect from January.

However, API secretary general Ernovian Ismy told just-style that the hike will be disastrous to its garment industry.

He said garment factories cannot afford this wage hike and "as a result there will be mass lay-offs."

"How can we justify it when IDR2.2m is the basic monthly salary of a degree holder?" he asked. "And now it is going to be the minimum wage of an unskilled factory operator."

The wage hike was "largely politics" ahead of the 2014 presidential election in Indonesia, he noted.

A spokesperson for the Indonesian Employers Association (Apindo) agreed on the need to lay-off workers to cut costs. "There will be massive lay-off although the number is not yet decided," he told just-style.

Indonesia, a garment exporting powerhouse, has 2,869 factories which employ 1.4m people, according to the API.